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Governor’s Two-Year Budget Proposal: $43.8 Billion

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HARTFORD, Conn. (AP) _ Gov. Dannel P. Malloy promised Wednesday to keep moving Connecticut closer to recovery from the national recession by continuing investments in education and job development as he unveiled the second, two-year budget of his administration. (Read the full speech)

Acknowledging criticism from the General Assembly’s minority Republicans, Malloy defended his multi-million-dollar efforts to help lure companies to the state, arguing it’s “incumbent upon state government to pursue jobs” and stimulate economic growth.

“Burying our heads in the sand is not a strategy. And sitting still is not an option,” the first-term Democrat said, mentioning companies such as Amazon and NBC Sports that have recently announced plans to open facilities and create jobs in Connecticut.

But immediately after Malloy finished his address to a joint session of the General Assembly, GOP leaders accused the Democrat of crafting a two-year, $43.8 billion budget proposal that’s balanced by gimmicks, tax increases and borrowing– tactics that Malloy has criticized former Republican governors of using to balance their budgets.

“This is everything that he said it is not,” said Rep. Sean Williams, R-Watertown, the ranking Republican on the legislature’s Finance Revenue and Bonding Committee. “I have never, ever seen this many gimmicks in a budget as we’re seeing now.”

Legislative Democrats, who praised Malloy for funding economic development and education initiatives in a budget that needed to cover a projected two-year, $2.4 billion deficit, were more willing to give their party’s governor the benefit of the doubt.

“The governor has made some very tough choices in very difficult economic times and the blueprint that he’s laid out today is an excellent starting point,” said Senate President Donald E. Williams Jr., D-Brooklyn. “The budget will be negotiated over the next couple of months but the budget he’s presented is transparent and it is balanced.”

Malloy began his budget address on Wednesday asking lawmakers to keep in their hearts the families of the 26 victims of the Sandy Hook Elementary School shooting in Newtown, the first responders, educators and other touched by the massacre.

“Whatever differences we have in this building over the next several months, they will be trivial compared to what happened in a quiet town in southwestern Connecticut,” he said, urging lawmakers to work with him cooperatively to reach a final budget compromise over the coming weeks.

Malloy is going to need lawmakers’ help this session.

His budget relies on legislators approving changes to the state’s constitutional cap on spending, a move that requires a three-fifths majority of the General Assembly. The governor wants certain expenditures to be exempt from the cap, such as grants to distressed municipalities and certain debt payments.

Unlike his last two-year budget in 2011, which raised taxes by $2.6 billion over two years, Malloy said this latest plan includes no new tax increases. However, the bill does continue a surcharge on the corporation tax and continues taxes on electric generators and insurance premiums that were scheduled to expire.

Malloy’s plan also calls for exempting the first $20,000 of the assessed value of vehicles from local property taxes. That means someone who owns a car with a market value of $28.571 would no longer pay any property taxes on that vehicle. While it means a $560 million per year loss in revenue to municipalities, Malloy’s budget director, Benjamin Barnes, insisted that cities and towns will be “kept whole.”

For example, the governor’s budget increases the state’s major education grant by $152 million over two years and nearly doubles funding for the Town Aid Road program, which helps fund local road projects.

Municipal leaders were skeptical, however.

Torrington Mayor Ryan Bingham, president of the Connecticut of Conference of Mayors, said officials were trying to review the complicated changes the budget makes to state aid to cities and towns. But he said if they’re not “kept whole,” as Barnes said, homeowners and businesses that pay property taxes will have to make up the revenue lost from ending property taxes on vehicles.

“I don’t see there being an ability to absorb the kind of cuts that are needing to be made on the local level with that property tax reduction in vehicles,” he said.